LONG BEACH USED TO BE THE "AFFORDABLE" ALTERNATIVE TO OC AND LA, BUT AN INFORMATIONAL AND PSYCHOLOGICAL BARRIER IS PREVENTING LB FROM ACKNOWLEDGING THE SEVERITY OF THE ENSUING HOUSING CRASH, AS LONG BEACH REAL ESTATE PRICES NOW SURPASS THE OC IN MANY CASES. I CHALLENGE THE CONVENTIONAL WISDOM OF COMMISSION-HEADS WHO CLAIM "NOW IS A GREAT TIME TO BUY," AND I WANT TO HELP BUYERS ENSURE THEIR LARGEST SINGLE INVESTMENT IS A SOUND ONE.

Tuesday, December 21, 2010

More than 1,000 days on the market and the bank finally approved a short sale at the price it should have been at all along.

Just look at this lesson in incompetence:

Dec 17, 2010

Sold (MLS) (Closed)

$200,900

--

Inactive CARETS #P701097

Jul 31, 2010

Pending (Backup Offers Accepted)

--

--

Inactive CARETS #P701097

Jul 19, 2010

Price Changed

$199,900

--

Inactive CARETS #P701097

Jun 23, 2010

Price Changed

$219,900

--

Inactive CARETS #P701097

May 19, 2010

Price Changed

$225,000

--

Inactive CARETS #P701097

Mar 03, 2010

Price Changed

$250,000

--

Inactive CARETS #P701097

Dec 30, 2009

Price Changed

$289,000

--

Inactive CARETS #P701097

Dec 30, 2009

Relisted (Active)

--

--

Inactive CARETS #P701097

Dec 03, 2009

Pending

--

--

Inactive CARETS #P701097

Nov 12, 2009

Price Changed

$239,000

--

Inactive CARETS #P701097

Oct 30, 2009

Relisted (Active)

--

--

Inactive CARETS #P701097

Sep 23, 2009

Pending (Pending Sale)

--

--

Inactive CARETS #P701097

Sep 18, 2009

Price Changed

$249,000

--

Inactive CARETS #P701097

Sep 14, 2009

Price Changed

$270,000

--

Inactive CARETS #P701097

Aug 28, 2009

Listed (Active)

$319,900

--

Inactive CARETS #P701097

Aug 01, 2008

Delisted

*

--

Inactive CARETS #3

May 06, 2008

Listed

*

--

Inactive CARETS #3

May 06, 2008

Delisted

*

--

Inactive CARETS #2

Mar 30, 2008

Listed

*

--

Inactive CARETS #2

Mar 29, 2008

Delisted

*

--

Inactive CARETS #1

Feb 29, 2008

Listed

*

--

Inactive CARETS #1

May 25, 2004

Sold (Public Records)

$329,000

--

Public Records

Unbelievable.

In Saturday's post I mentioned that most Long Beach properties are selling for 2003 prices or lower, but that's in prime areas. In less desirable areas, like this one, the pricing is much closer to 2001.

Congratulations to the new owner for sticking it out for so long. Friends of mine just closed on a condo in Huntington Beach after TEN MONTHS spent wrangling with the bank. Because the bank was so slow to get off its ass, they missed out on the homebuyer tax credit and the record-low rates from the last few months.

But they, like this buyer, are paying less to own than it would cost to rent -- and that's cause for celebration.

++++++++++++++++++++++++++++++++++

The price was "$219,900" and changed to "$199,900"

$220 per square foot for an apartment just 1,000 feet from the sand. This is officially cheaper to own than rent -- even before the tax write-off.

But the bank has no intention of letting the property go for this bargain basement price. Because that would mean recognizing a horrific loss on the books.

So I expect this charade to go on and on and on...with a few price increases thrown in along the way to restart the process. It's been two-and-a-half years so far...I wouldn't be surprised to see this go on until 2012. As long as there are acronym-filled horseshit government programs left to exploit, this could go on indefinitely.

++++++++++++++++++++++++++++++++++++

The price was "$250,000" and changed to "$225,000"

In case anyone is operating under the misguided belief that the banking system has stabilized and housing is poised for a big comeback, I want you to consider that this shitty apartment is still booked at full value on the lender's books -- despite the current asking price being$114,000 less than the 2004 appraised value.

As long as that bullshit is allowed by the government (and in fact actively encouraged by way of mark-to-fantasy FASB policies and various extend-and-pretend programs like HAMP, HAFA, etc.), it will take YEARS for this inventory to actually hit the market. Meaning, returning to true values (based on actual incomes and sizable down payments) will take ages.

I'm tired of waiting -- exhausted, really -- but I'm also no fool. If I could use Other People's Money, this would be a no-brainer. Buy now and walk away if things go south. But I have my own cold, hard cash on the line and as long as countless properties like this are still rotting on the MLS, the buy signal is a long way off.

+++++++++++++++++++++++++++++++++++++++

The price was "$289,000" and changed to "$250,000"

Well that's one way to get buyers' attention! I guess now the question is whether the bank will actually let it go for nearly $100,000 shy of the original loan amount. I somehow doubt it. But maybe in light of the first-time homebuyer tax credit expiring, they're getting out while there's still some demand left. We'll see.

Sorry for the sporadic posts...I've been on the road all week.

Every time I travel I can't help but observe the local real estate situation. The last time I was in Miami was the summer of 2006, and as I drove around I remember marveling at the incredible number of construction cranes piercing the horizon. At the time I said to myself, "Who are these being built for? Is there that much demand for new housing or even rentals? How does all of this construction make sense?" From what I could tell, the completed towers seemed empty--why build more?

Anyhow, today the cranes are pretty much extinct but at night many of these new buildings were dark, reminiscent of the North Korea Towers in Irvine. Pretty crazy.

South Beach was still fun--it hasn't lost any of its swagger in this downturn.

+++++++++++++++++++++++++++++++++++++++

Address: 1318 East 2ND St #9, 90802 Asking Price: $289,000Purchase Price (2004): $329,000Beds: 2Baths: 1.75Sq. Ft.: 909$/Sq. Ft.: $318Year Built: 1964MLS#: P701097On Redfin: 131 daysHOA: $156Down Payment: $10,000 (FHA)Income Requirement (4x income): $72,000Monthly Nut: $1,700 (FHA)Description: Sunny & bright, this lovely condo has tons of storage space, a spacious dining room and living room, a separate master bathroom AND A PRIVATE GARAGE with storage that is big enough for an SUV! The home has large rooms that make the entire condo bright and roomy. Located just 2 blocks from the beach, this is perfect as a second home, vacation property or a retreat to enjoy every day!

"perfect as a second home, vacation property or a retreat to enjoy every day"? Looks like this bathroom took a vacation to the 1960s:

HORF!

And when was the last time you saw a white refrigerator?

Maybe I've just become accustomed to stainless fridges, but for some reason that outdated clunker is really jarring!

Pssst! Wanna see the secret to selling a tiny, dumpy apartment with original bathrooms in a shaky economy? Here you go:

December 30: The price was "$239,000" and changed to "$289,000"

Genius!

This short selling grifter has been priced below $270,000 for the last 75 days (50 of which were spent begging for $239,000) with no luck, but for some insane reason decided what this listing really needed was a price jack to $289,000. Because there's nothing buyers love more than a good ol' fashioned cornholing.

Anyhow, the point of this post isn't about greed or stupidity, or the living hell of two shared walls, or the difficulties involved with short sales, or the insanity of sellers having negative equity after FIVE FUCKING YEARS OF OWNERSHIP yet simultaneously driving $45,000 luxury SUVs...

No. Although all are at play here, this post is really about pent-up foreclosures.

You see, this property is just two months shy of its two year (!) anniversary on the MLS. It's technically not "shadow inventory" because its been out in the open on the MLS, right? But given the lender's failure to approve a sale in 22 months, it has never actually been "for sale." Meaning it's a bank-owned property in denial.

A monster loss is guaranteed, it just hasn't been booked yet.

And after it inevitably goes back to the bank, it will come back on the market at a greatly reduced price (it seems that most times, once the loss has been realized banks just try to unload). However, REOs dumped on the market crush values, putting everyone else in the area (further) underwater and perpetuating the cycle. It makes perfect sense why lenders are intent on keeping these phantoms in real estate limbo for as long as they can.

And without a mechanism to force lenders to actually approve short sales and process foreclosures (read: recognize losses) instead of extending and pretending for eternity, the market will be absolutely surrounded by these phantom properties for years and years, with no opportunity to actually buy them.

If this seller were smart (ha!) she would have stopped paying ages ago and lived rent-free this entire time. If her lender isn't interested in selling short after two years, they certainly aren't keen on foreclosing.

Saturday, December 18, 2010

The dearth of Long Beach inventory has made it really difficult to find properties worth featuring, but then I saw this outrageously overpriced pile of shit and just had to put it on the blog.WISHING PRICE: $499,000ADDRESS: 6150 East BAY SHORE Walk #10, 90803BEDS: 1BATHS: 1SQ. FT.: 815$/SQ. FT.: $612YEAR BUILT: 1965COMMUNITY: Belmont Shore/Park/Naples/Marina Pacific/Bay HarborMLS#: S640717ON REDFIN: 15 days

HOA: $298

DOWN PAYMENT: $99,800

INCOME REQUIREMENT: $114,000/year

MONTHLY NUT: $2,800DESCRIPTION: Beautiful sought after Alamitos Bay Shore Condo in the exclusive community of Bay Shore Yacht Club. This Bay front condominium features 1 master suite with upgraded kitchen and bath. Only 15 units in this secured building. Underground parking with storage unit. Elevator to the 3rd floor. Laundry facility onsite. Can watch the Naples Boat parade right from your Bay view balcony and front room. Low association. Rarely on the market. .. .so get you offers in fast!

$499,000 for an 815 square foot apartment.

$499,000 for an 815 square foot apartment with one bedroom.

$499,000 for an 815 square foot apartment with one bedroom in a 45-year-old building.

$499,000 for an 815 square foot apartment with one bedroom in a 45-year-old building with community laundry.

$499,000 for an 815 square foot apartment with one bedroom in a 45-year-old building with community laundry, sporting kitchen counters and cabinets like these:

Good lord.

I mean, the fact that he shelled out for a fancy stainless steel oven and microwave but left everything else hideously intact (what, ran out of money for the matching fridge?) -- and then with a straight face claims this is an "upgraded" kitchen -- tells you pretty much everything you need to know about this seller's mental state.

And great news: those horrendous kitchen cabinets are continued in the bathroom!

Absolutely revolting. Shower doors and a curtain. I've never seen that. And I can't recall ever seeing such half-assed "upgrading." Embarrassing.

Again, I remind you, this asshole is asking HALF-A-MILLION DOLLARS.

That asking price would require the potential homeowner, at the very minimum, to make $114,000 per year to reasonably afford this place. You really think a single person or retiree sitting on that kind of loot would seriously consider putting it into this festering wound on the anus of the MLS?

This pricing makes absolutely no sense. The most expensive nearby one-bedroom to sell during the last six months was for $290,000. Given, it wasn't right on the water or in this stellar location, but that's not the point. Do these mongoloids truly believe their shit box is really worth another $209,000 because it's in this particular building?

Anyone think after viewing the interior photos of this lumpy, low-end yawn box that it deserves a $182,000 premium over that comp?

Really?!

His proximity to the water is clouding his judgment. The fact is, no matter where this building is located this is an 815 square foot apartment with one bedroom in a 45-year-old building with community laundry, sporting kitchen counters and cabinets like these:

It's worth noting that this place was purchased for $385,000 in 2005. Given that the vast, overwhelming majority of Long Beach properties are selling for 2003 prices or lower, this asking price makes even less sense. Their little-r realtor is clearly doing nothing to encourage a realistic asking price, so here we have yet another delusional Long Beach seller clogging up the MLS and wasting everyone's time. If he, for whatever reason, had to lower the price to a level that would actually garner a sale, he'd be lopping off, at a minimum, $150,000 just to get the bidding started.

What do you think, given what you know about this seller thus far, the odds are of that happening?

And the fact that the market-clearing price for such and undesirable property (in a highly desirable, yet lightly traveled by buyers, area) is in reality so much lower than the current asking price highlights the worst part of this whole situation: Because he waited too long to put it on the market, he now has zero room to negotiate. He painted himself into a pricing corner.

And now, unless he wants to write a check to the bank at closing, his only choices are leaving it on the market hoping for a miracle, or tucking his tail between his legs, taking it off the MLS and gritting his teeth every time he makes his roughly $2,200 payment for the next 25 years -- knowing full well that he could rent the very same place for considerably less.

So given those crappy options, why sell in the first place? I'm sure some of you noticed that a 5-year Adjustable Rate Mortgage would have reset and recast earlier this year, making the ability to keep up with that hefty payment considerably more difficult. Coincidence?

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